Construction is still under way at the Student Athlete High Performance Center, Sunday March 29, 2010, in Berkeley, Calif. The site next to Cal's Memorial Stadium has been a controversial subject for the last few years with students protest.

Photo: Lacy Atkins, The Chronicle

Construction is still under way at the Student Athlete High...

Image 2 of 3

The gates surrounding the construction site of the Student Athlete High Performance Center are locked, Sunday March 29, 2010, in Berkeley, Calif. The site next to Cal's Memorial Stadium has been a controversial subject for the last few years where students have protested.

Photo: Lacy Atkins, The Chronicle

The gates surrounding the construction site of the Student Athlete...

Image 3 of 3

The Cal Golden Bear stadium is the foregrown of the construction site of the Student Athlete High Performance Center, Sunday March 29, 2010, in Berkeley, Calif. The site has been a controversial subject for the last few years with the students and staff.

This spring, workers poured the concrete floors for a 142,000-square-foot, four-story Student Athlete High Performance Center that will house lockers for the UC football team and meeting rooms adjacent to seismically unstable Memorial Stadium.

The project is being paid for with $135 million in bonds. Campus financial officials planned to pay off those bonds with donations.

The university is confident the funding goals will be met, but if not, UC Berkeley's department of intercollegiate athletics could be responsible for paying off the center's bonds. There's a problem, though. The department has no money and last year it had to be loaned millions of dollars from campus general funds.

Intercollegiate athletics is supposed to be self-supporting. But instead it is relying on the campus for millions of dollars of funding, and that comes at the expense of the financially beleaguered academic programs, said Brian Barsky, UC Berkeley computer science professor and a critic of university spending decisions. With the athletics department already heavily subsidized, Barsky doesn't see how it can pay off its staggering future debts.

The university will have to bail out Athletics again, Barsky said.

"If it were happening in a normal time, it would be egregious, but given that this is happening in the context of record cuts to our academic program, it's unconscionable," Barsky said.

Financing plan

Nathan Brostrom, now UC's executive vice president for Business Operations, created the financing plan during his time with UC Berkeley.

Simply put, it was designed to get the campus a building for free. First the school would borrow money to build the center. The same amount of money would be raised in donations simultaneously. Next, the donated money would be put to work in the stock market where it would make enough in returns to pay off what was borrowed.

Financing buildings using the stock market is a practice usually done in the private sector and at private universities, but UC has recently adopted the tactic and planned to fund additional buildings this way. Brostrom said when the plan works, a building gets built for free and the gift fund functions as an endowment, creating even more cash for operations.

"There is a certain amount of market performance risk, but over the last 60 years our analysis has shown this model works out, even with declines like last year," he said, adding, "obviously, I'm not going to guarantee performance."

Center's conception

The Student Athlete High Performance Center was originally conceived as a world-class facility for 13 UC Berkeley sports. The regents approved the building in 2006 at about $100 million to be funded entirely from gifts. But in 2007, the regents approved a switch to the debt and gift plan, and the school set out to raise funds.

Since then, project costs have ballooned to $153 million due to litigation stemming from the famed tree-sitters and the stock market collapsed. Excavation of the site began in April 2009, paid for with interim funds. In August, UC issued $124 million in bonds created by President Obama's American Recovery and Reinvestment Act.

In November, campus faculty began protesting the cost of intercollegiate athletics, including the center's price tag. Barsky authored a resolution from the Academic Senate. With overcrowded classes, furloughed instructors, enormous student fee hikes and a drastic cut in state funding, a debt-financed structure that serves a fraction of the school is a particularly egregious expense, the Academic Senate concluded.

Used by a few hundred

Destined to be used by just 450 students per year, the Performance Center proves the school's educational priorities are misaligned, Barsky said.

"This is taking sub-prime lending to new heights," he said.

The Athletics Center is scheduled to open in late summer 2011. The first annual payment, about $4.92 million a year, is due a year later - July 1, 2012.